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Life Health > Health Insurance

Agency finds holes in an exchange program's eligibility screening

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In theory, a prison inmate in Kansas who was in the country illegally might have been able to get public exchange plan coverage in Colorado during the first open enrollment period, as long as the inmate did not apply for premium tax credit subsidies.

Officials at the Health and Human Services Office of Inspector General (HHS OIG) have published findings raising that possibility in a report on an audit of the exchange plan eligibility determination process at Connect for Health Colorado.

The Patient Protection and Affordable Care Act (PPACA) set up the exchange system, and it also created a premium subsidy tax credit.

Adult consumers can use a state’s exchange only if they are not incarcerated, are in the country legally, and meet state residency requirements, HHS OIG officials say.

See also: Witnesses: PPACA income verification is a mess

To qualify for the premium tax credit subsidy, consumers must meet income requirements and show they are not eligible for affordable minimum essential coverage (MEC) from an employer.

Auditors from HHS OIG, an agency that oversees the U.S. Department of Health and Human Services (HHS), visited the offices of the Colorado exchange in the summer of 2014 to see how the exchange had handled the eligibility determinations during the first open enrollment period.

See also: Watchdog: IRS used bad Java in PPACA system

The auditors reviewed a random sample of files for 45 of the 37,964 people who enrolled in Connect for Health Colorado plans from Feb. 22, 2014, through March 31, 2014.

The auditors looked only at internal controls and procedures and not whether the exchange had made any incorrect determinations.

The auditors found that 14 of the sample applicants had not asked for premium tax credit subsidies.

During the first open enrollment period, the Colorado exchange skipped incarceration, state residence and lawful presence checks for consumers who did not apply for tax credits.

“Contrary to federal requirements, the Colorado marketplace enrolled these applicants in a [qualified health plan] without obtaining the required verification,” HHS OIG officials say. 

For the 31 applicants who did apply for premium tax credits, the exchange failed to check whether the applicants were federal employees, who were eligible for federal employee health benefits, officials say.

Twenty-five of the applicants who applied for tax credits had conflicts between application information and information from other sources, such as government income data. The exchange resolved 19 of those inconsistencies, but it seems to have failed to resolve six of the inconsistencies, officials say.

In a letter to Patrick Cogley, an HHS OIG regional inspector general in Kansas City, Mo., Alan Schmitz, the Colorado exchange general counsel, said the exchange is looking into options for verifying the information submitted by applicants who did not seek premium tax credits.

Those customers do attest that the information they are providing is accurate, Schmitz wrote in the letter.

Customers also attest that they are not eligible for MEC from the federal employees’ health benefits program, but the Colorado exchange is looking at options for verifying applicants’ attestations about lack of access to MEC, Schmitz said.

The Colorado exchange has improved its inconsistency verification and resolution process since HHS OIG officials conducted their audit, and it now has an automated process for removing tax credit eligibility for consumers who fail to provide the documents needed to clear up inconsistencies, Schmitz said.

See also:

3 things you CAN’T know about IRS PPACA problems

4 holes in PPACA exchange data security safeguards

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